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Wall Street gave a warm greeting to Pfizer‘s animal health business Friday, as Zoetis got a big lift in its first day of trading as it is spun out from the drugmaker.

The company raised $2.2 billion in its initial public offering, marking the biggest IPO since Facebook‘s $16 billion debut in May, then jumped 20% in the first few minutes of trading. Shares of Zoetis, which priced above the expected range at $26 apiece, climbed over the $31 mark before settling back to an 18.7% gain at $30.87.

Pfizer’s Chairman and CEO Ian Read said the Zoetis IPO creates the “largest standalone company fully devoted to animal health medicines and vaccines,” and leaves the pharmaceutical giant “better positioned to focus on our core business,” by unlocking the value in Zoetis and returning it to the parent’s shareholders. Pfizer was up 1.1% at $27.59 Friday morning.

Paul Bard, vice president at IPO research firm Renaissance Capital, told Forbes in December that he expected Zoetis to be one of the best and biggest new offerings of 2013. “It reminds me of when Bristol-Myers Squibb took Mead Johnson Nutrition public,” Bard said at the time, referring to the wildly successful spinoff of the pediatric nutrition business in 2009 into a stock that has since gained more than 180%.

Over the past few years I’ve spoken to the CEOs of a number of businesses that were spun out of larger conglomerates or part of a corporate breakup and all of them — from the three executives running the pieces of the former ITT to Fortune Brands Home & Security chief Chris Klein to ADT’s Naren Gursahaney — stressed the freedom and clarity of focus being independent allows.

Instead of competing for resources and talent with other, unrelated businesses, these companies now have the financial wherewithal to pursue their own strategy and their success is not dependent on other pieces of a diverse corporate structure.

For Zoetis, the separation will be a bit more gradual; Pfizer still controls 80% of the company post-offering. Joe Cornell, founder of Chicago-based Spin-Off Advisors, says the next step will likely be an exchange offer from Pfizer later this year, giving shareholders the ability to exchange some of their holdings for shares in the animal health business, likely at a discount to incentivize participation.

With more than $4 billion in annual revenue and a market cap north of $15 billion, Zoetis quickly becomes the 800-pound gorilla in the animal health space. Cornell says that could win the company support from the investment community, which certainly appears to be the case Friday.

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No, and thanks for raising this point. This part of the transaction is technically a spinout, rather than a spinoff (I’ve corrected the headline and story to make the point clearer).

In a straight spinoff, there is typically no additional capital raised, and shareholders simply receive a certain amount of stock in the new business for each share they hold in the parent.

In this case, existing Pfizer shareholders still have a stake in Zoetis, but only through Pfizer’s ownership rather than shares in the new company at this point. When Pfizer spins the remainder of the business it will likely be through an exchange offer that gives shareholders the ability to trade a portion of their Pfizer position for shares in Zoetis.

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